👁️ Elon Musk's Public Transit Bait-And-Switch Rolls On

Space Karen has spent a decade cosplaying as a visionary to kneecap real transit solutions. Also: The FBI's awesome fake-token sting; Roblox is a "pedophile hellscape"; Uber is still abusing drivers.

Bumps in the Road: Tesla’s Robovan, a product that will never actually see the light of day - and the nauseating 10% stock drop it helped trigger.

Welcome to your Tuesday Dark Markets news roundup. Scroll down to read about the massive chip on my shoulder about Elon Musk’s transit LARPing.

But first, it’s been a good week for busting cheats, bad guys and fakers.

Uber is Still Stealing from Drivers

Bloomberg has done some amazing data journalism to discover that Uber and Lyft are circumventing New York’s new rideshare labor laws by locking them out of the apps, pretty much at random. Essentially, the apps are denying contractors the right to work, which is pretty ironic all things considered. This isn’t just a scam that makes driver’s lives far worse - it also makes prices higher for riders!

While Lyft and Uber argue the lockouts are a necessary consequence of the New York law, they’re clearly against the intent of the rules, and I think there’s a decent chance of a wage-theft lawsuit succeeding here. The reporting and data-gathering is also front and center in this story: Bloomberg did fantastic work here.

The FBI’s Very Cool Fake-Token Manipulation Bust

The DOJ’s Boston prosecutor’s office has charged four market makers—ZM Quant, CLS Global, MyTrade, and Gotbit—with wash trading and market manipulation on behalf of a token called NexFundAI. The brilliant part of this is that NexFundAI was … created by the FBI, who reached out to the market makers and contracted them to do fraud on their behalf. (This would probably be some form of entrapment except that it’s obvious the fraud was in the normal course of business for these market makers).

Market making is a subsector of the cryptosphere that is acutely vulnerable to hidden fraud. The job of a market maker is to “provide liquidity” in a token, and in principle this activity should be “market neutral.” But it is fundamentally simple to engage in wash trading to create fake volume, or even to trade the value of a token up in the broader market, under cover of “providing liquidity.” Other forms of more nuanced manipulation, such as Jump Crypto’s deal with Do Kwon.

According to my sources, MM deals in crypto have in the past also involved handing over options to market makers - simultaneously incentivizing them to trade a token higher … and giving the MMs a way to take a lot of alpha away from founders and other holders.

Finally, it’s notable that bots were used to execute these wash trades. “Bots” are often touted as the secret sauce in crypto or securities investment fraud, but this sort of brainless self-dealing is all the bots are really good for.)

Roblox is a “Pedophile Hellscape” With Fake Metrics

The early signals from dumpster fires like Peloton made clear that the Covid-19 pandemic had unleashed a ton of silliness in the market for “stay at home” stocks. Some companies, like Peloton, were at least honest about that. It looks like Roblox, the metaverse game aimed at pre-teens, decided to try and lie and keep the gravy train going - while also being really terrible at keeping sexual abuse off the platform.

That, at least, is the claim of the generally very reliable (and grimly entertaining) Hindenburg Research in its latest devastating research report. Broadly, the report claims that Roblox is multi-counting users with alt accounts, and counting bot accounts as real users.

Far more disturbing, Roblox appears to have actively chosen to underfund compliance and enforcement, leading to shockingly rampant sexual content and overt grooming on the platform. The examples cited by Hindenburg are numerous and truly heinous. Just one of the less specifically grotesque data points:

Roblox stock has actually not seen a lot of downward pressure from the report, but that might simply be because it has already long since deflated, now down about 63% from its 2022 high.

Elon’s Nefarious Transit Cosplay

First of all, the basics: Tesla’s “We Robot” event was an unmitigated fucking disaster for the company, and for Elon Musk personally.

That’s largely because the most highly touted “robots” at the event, the Optimus humanoids, were not robots at all, but remote-controlled animatronics. (Also, just like “Cybervan” and “Cybertruck” before it, this is a godawful, pea-brained incel name, and possible copyright infringement of Hasbro.)

The robots were so widly misrepresented by the company that Tesla stock dropped a dizzying 10% in one day, destroying on the order of $70 Billion in notional value, almost certainly because nobody was willing to tell Elon the truth - that his cheap trick would almost certainly be revealed. This has gifted us the intoxicating spectacle of investors and bootlickers as prominent as Chris Bakke getting completely bamboozled, at the exact moment that smarter and savvier players were GTFO of what is now dangerously close to being a meme stock. A 10% one-day drop is simply *not normal* for a company in the S&P 500, and reflects that TSLA 0.00%↑ is still a wildly speculative play, with a premium substantially driven by the emotional attachments of retail.

The reaction to Optimus revealed some of the darker of those attachments. At the milder end, there’s Bakke’s quip that the bartender didn’t ask for a tip, revealing the anti-worker goals built into the entire project of humanoid robotics (I’ve felt reason to respect Chris in the past, so this was particularly disappointing). On the more “legitimately insane” end of the spectrum, we got white South Afrikkkans fantasizing about a workforce that can’t politically resist their domination.

Tesla’s Trains to Nowhere

I want to examine a different angle of this same anti-human cathexis: Elon Musk’s decade-long perverse relationship with public transit. We saw it last week with the “Cybervan,” a purportedly autonomous people mover that is clearly just a car on wheels, but is designed to look like a train. That includes a skirt that hides the wheels by going so low that it requires a hydraulic suspension to make the thing actually drivable on real roads.

This follows at least two other moments when Elon and Tesla presented themselves as revitalizing or reinventing public transit - the infamous Las Vegas tunnel, and the now perhaps somewhat forgotten Hyperloop. These were essentially rhetorical deceptions intended to associate Tesla with an idea of public transit, but which a) never actually achieved any of their goals, and b) presented a vision of public transit that could only seem remotely viable in the mind of a racially paranoid and completely friendless billionaire white South African.

The pattern here is clear: Tesla under Elon Musk has sought to steal valor from public transit by evoking an idealized and impactical vision of it, when their real goal is to sell more individual cars. Moreover, these pseudo-public transit projects - like the idea of an autonomous car itself - have been used as political cudgels to kill or curtail actual public transit projects.

I reported quite extensively on the Hyperloop proposal circa 2016 - and I’ll admit it was a very cool and entrancing idea. The nature of that proposal is important to review: Elon Musk essentially drew a rough concept on a napkin, then invited others to actually build it. I firmly believe that this was the responsible, restrained version of the vaporware salesmanship Elon would soon start doing much more crassly. It was after he saw the reception of the mere idea of the Hyperloop that Elon really started making insane promises on behalf of Tesla - promises, like the timeline for self-driving cars, that he has never seemed to feel even the slightest obligation to deliver on.

But equally important, the Hyperloop was only announced to help derail a California High Speed Rail project that Elon didn’t like - a fact that only became fully clear in 2022 thanks to reporting by Paris Marx. I have to pat myself on the back, because I had spotted this dynamic back in 2014 in Florida, where right-wing politicians were touting the promise of self-driving cars as a superior option to rail (Archive link).

My later reporting included attending a student pod design competition in 2016, where I also interviewed several of the principals in what would become a contentious pair of Hyperloop startups. They raised tens of millions of dollars and accomplished absolutely nothing - massive capital destruction that flowed directly from Elon’s use of technology as a lever for political manpulation.

At the very least, the Hyperloop was an interesting and adventurous concept. After that, we got the far stupider Las Vegas Tunnel. The “Loop” was initially supposed to be an autonomous network of over 100 stations, but it turned into one short tunnel that used conventional drivers to shuttle people from point A to point B. It doesn’t even do that particularly well.

And now, finally, the Cybervan (Again, absolutely dogbrained name). Yet again, we have an idea based on autonomous driving, which Tesla has not shown the discipline or even ability to deploy in a compliant and safe way - so the infrastructure and organizing to make the Cybervan an actual “people mover,” even in the sort of controlled environment where it might replace a Disney-style monorail, is simply never going to happen.

It’s gratifying to see the catastrophic stock price drop, because it seems to mean people - at least, the smart people with enough size to move markets - now genuinely understand that Elon Musk is mostly a bullshit artist.

If only we could get back the decade he spent blocking a clear path to a future, in favor of lining his own pockets.